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Commissioner of Income Tax Versus Carborandum Universal Ltd.

2007 (12) TMI 504 - MADRAS HIGH COURT

Tax Case (Appeal) No. 1474 of 2007 - Dated:- 4-12-2007 - K. Raviraja Pandian And Chitra Venkataraman, JJ. For the Appellant : J. Naresh Kumar JUDGMENT K. Raviraja Pandian, J. The relevant assessment year is 1991-92. 2. The assessee (respondent) is a company in which the public are substantially interested. The respondent company is manufacturing and selling abrasives, refractors, grinding wheels, etc. In respect of asst. yr. 1991-92, the assessee filed return and claimed deduction under s. 35AB .....

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de excess claim, giving inaccurate particulars in order to evade tax. 5. Aggrieved by the order of the imposition of penalty by the AO, the assessee filed appeal before the CIT(A), who held that the assessee was under the bona fide impression that he was entitled to double deduction and claimed the same. He further recorded a factual finding that at the time of filing of the return, the issue as to the claim of double deduction was not settled, rather it was in favour of the assessee in the sens .....

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enue, not satisfied with the order of the CIT(A), carried on the matter in appeal to the Tribunal and the Tribunal dismissed the appeal on the same reasonings given by the CIT(A), and the correctness of the same is now canvassed before us in this appeal by formulating the following substantial question of law : "Whether in the facts and circumstances of the case, the Tribunal was right in deleting the penalty under s. 271(1)(c) of the Act levied on the assessee ?" 8. Heard the argument .....

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& Anr. vs. Union of India & Ors. (1992) 108 CTR (SC) 275: (1993) 199 ITR 43(SC) (cited supra) delivered by the apex Court on 22nd Oct., 1992, by which the law has been settled to the effect that the benefit of double deduction in respect of the same item was prohibited. 10. From the materials available on record, the Tribunal recorded a finding that it was clear that the assessee company had bona fide belief that it was entitled for two claims in respect of the same item under s. 35AB a .....

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ound as of fact that he had acted on the basis of wrong legal advice, the question of his failure to discharge his burden in terms of the Explanation appended to s. 271(1)(c) of the IT Act would not arise. In Dilip N. Shroff vs. Jt. CIT [Civil appeal arising out of SLP (C) No.26831 of 2004] delivered today [(2007) 210 CTR (SC) 228: (2007) 291 ITR 519(SC)], this Court observed : 'The expression 'conceal' is of great importance. According to Law Lexicon, the word 'conceal' mean .....

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g to truth; erroneous; as an inaccurate statement, copy or transcript.' It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars. The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the Explanations are taken recourse to, a finding has to b .....

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were material to the computation of his income. The explanation having regard to the decisions of this Court, must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the ITO must arrive at his satisfaction in this behalf. [See CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321: (2000) 246 ITR 568(Del) and Diwan Enterprises vs. CIT (2001) 167 CTR (Del) 324: (2000) 246 ITR 571(D .....

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e authorities must consider the matter afresh as the question has to be considered from a different angle. It is now a well-settled principle of law that the more stringent the law, the more strict a construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution. [See P.N. Krishna Lal vs. Government of Kerala (1995) Supp 2 SCC 187]. The omission of the word 'deliberate', thus, mayor may not be of much .....

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iberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. We may notice that in Addl. CIT vs. Jeevan Lal Sah (1994) 117 CTR (SC) 130: (1994) 205 ITR 244(SC) this Court dealt with the amendment of s. 271(1)(c) made in the year 1964 to hold (p. 248) : 'Even after the amendment of 1964, the penalty proceedings, it is evident, continue to be penal proceedings. Similarly, the question whether the assessee ha .....

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yet again in K.C. Builders & Anr. vs. Asstt. CIT (2004) 186 CTR (SC) 721: (2004) 265 ITR 562(SC): (2004) 2 SCC 731 wherein it was held (p. 569) : 'One of the amendments made to the abovementioned provisions is the omission of the word 'deliberately' from the expression 'deliberately furnished inaccurate particulars of such income'. It is implicit in the word 'concealed' that there has been a deliberate act on the part of the assessee. The meaning of the word ' .....

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view of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that a penalty under s. 271( .....

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ed strictly and narrowly and not widely or with the object of advancing the object and intention of the legislature.' Referring to a large number of decisions, it was furthermore observed : '27. Every statutory provision for imposition of penalty has two distinct components : (i) That which lays down the conditions for imposition of penalty. (ii) That which provides for computation of the quantum of penalty. Sec. 271(1)(c) and cl. (iii) relate to the conditions for imposition of penalty, .....

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